Silver started the week off on the wrong foot and thus far has not looked back. The precious metals markets have been watching developments regarding the Syrian crises very closely, along with crude oil and other markets. Recent developments including a Russia plan to obtain Syria’s chemical weapons arsenal have greatly diminished the chances of an imminent strike by the U.S. military.
President Obama has asked congress to hold off on a vote authorizing military force in Syria, and Secretary of State Kerry will be meeting with Russian officials in order to discuss the potential plan going forward. It has been pretty clear from the get go that U.S. citizens do not favor getting involved in Syria, and at this point it seems less and less likely. In fact, tensions have eased to the degree that oil futures have calmed down a bit backing off from recent highs, and stocks have rallied sharply this week.
After last weeks U.S. department of labor’s non-farm payrolls report, the focus will likely return to the Fed and what they may or may not do next week. In the mean time, markets will get readings on weekly jobless claims tomorrow as well as import and export prices, and on Friday will get the latest reading on the producer price index, retail sales, and consumer sentiment.
While we do not expect any of these reports to be market movers, it is likely that a little special attention is paid to the weekly jobless claims following last week’s disappointing jobs data and downward revisions. Consensus estimates are for 330,000 claims. Any significant upside surprises in this number could cause equities to give back some of the week’s gains.
Regarding the Fed, well it still appears that a tapering announcement or plan is on track for next week. The majority of economists still believe action will be initiated at next week’s meeting. Given the recent data trends, it is certainly a very good possibility. This along with easing geopolitical tensions have taken some of the wind out of silver’s sails. Now it is likely a waiting game until the Fed meets and either tapers or doesn’t.
From a technical perspective, silver prices remain in an uptrend however, that uptrend is under siege with recent price action. Silver has fallen below its 9 day EMA this week and is currently testing its 20 day EMA in the $23.09 area. Although we would expect this level to hold-at least on the first test, should it give way the market has further support below at the 50 day EMA in the $22.27 area. The bulls need to take prices back above yesterday’s highs at $23.82 to reestablish control.
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